Startup culture is all the rage. Is there a downside?
Back in August 2010, Bend software startup G5 landed its first round of financing, a $15 million boost from the equity firm Volition Capital. Not long after that, according to co-founder and CEO Dan Hobin, company culture took a turn for the worse.
New layers of management, a couple of new departments and systems — all of a sudden, what had once been a hustling, hard-charging startup grew bloated and sluggish.
“When you’re a startup, you gotta do whatever it takes to be successful,” says Hobin, who launched a few startups in California during the dot-com boom and also helped start the Bend technology accelerator FoundersPad. “We went through a period where we got big fast, and we kind of lost that spirit. We laugh around here now. We call it ‘TFC — too fuckin’ corporate’.”
For a young, energetic company like G5, growing into something that no longer fit the bill was tough. The company has since recaptured much of its original vigor, but its trajectory serves as a good example of when a startup might no longer be one — and why it matters.
“I think it’s a psychological thing more than something like a certain amount of revenue or number of employees,” says Rick Turoczy, founder and editor of the Silicon Florist blog and general manager of the Portland Incubator Experiment. “There’s a cultural component to it that can be embraced at all levels of companies. You could have a rapidly growing company with hundreds of employees and still be a startup, or one that has only 10 employees but is far beyond being a startup.”
Startup culture often brings to mind ping-pong tables and kegerators. But these are little more than employee perks, says Eric Winquist, CEO of Portland startup Jama Software. At Jama, he says, startup culture is about being innovative, staying connected with colleagues, and having access to as much information and as many tools as possible.
“When organizations shift and start growing away from that, and the culture changes — that’s one way of thinking about when it’s no longer a startup,” Winquist says.
Just as the early stage mind-set can be a good way to tackle business challenges, it can also be valuable when it comes to hiring and retaining quality employees. On the flip side, companies that behave more like established corporations might have a leg up when it comes to customer stability.